The much-anticipated Income Tax Bill 2025, which aims to replace the 60-year-old Income Tax Act of 1961, is expected to be tabled in the Lok Sabha on Thursday, as per reports. The bill, spanning 622 pages, was approved by the Union Cabinet on February 7 and is part of a larger effort to streamline and modernize India’s tax system.
Once passed, the proposed legislation will be called the Income Tax Act, 2025, and is likely to come into effect from April 2026. However, before becoming law, it will undergo multiple stages of scrutiny, including a review by the Parliament’s Standing Committee on Finance.
The new bill is designed to simplify the language of the tax laws, making them more concise, clear, and easy to understand. This move is expected to reduce disputes, lower litigation, and provide greater tax certainty for taxpayers. Despite the structural overhaul, the bill will not change the existing tax slabs or modify current tax rebates.
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The Central Board of Direct Taxes ( CBDT ) formed an internal committee, along with 22 specialized sub-committees, to oversee the review of the proposed law. The government also sought public input in four key areas:
As part of this consultation process, the Income Tax Department received approximately 6,500 suggestions from stakeholders.
Speaking on February 8 about the bill’s journey, Finance Minister Nirmala Sitharaman stated:
“…The New Income Tax proposal, I hope to have it introduced in the Lok Sabha in the coming week. Post that, it will go to a committee. The bill will again go to the Cabinet after the parliamentary committee gives its recommendations on it. After Cabinet approval, it will again be introduced in Parliament. I still have three critical stages to pass through.”
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After being introduced in the Lok Sabha, the bill will be referred to the Parliament’s Standing Committee on Finance for a detailed examination and recommendations. Then, it will return to the Union Cabinet for final approval before being reintroduced in Parliament for passage.
The Income Tax Bill 2025 is a major component of the government’s broader tax reforms aimed at making India’s tax system more transparent, efficient, and taxpayer-friendly. If passed and implemented as planned, it will mark a significant shift in India’s direct tax framework.
With the bill’s tabling expected tomorrow, all eyes will be on Parliament’s response and the deliberations that follow in the coming days.
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